TOKYO: Crude oil jumped while the rouble plunged nearly 30 per cent to a record low on Monday (Feb 28) after Western nations imposed tough new sanctions on Russia for its invasion of Ukraine, including blocking some banks from the SWIFT global payments system.
Safe-haven demand boosted bonds along with the dollar and yen while the euro sank after Russian President Vladimir Putin put nuclear-armed forces on high alert on Sunday, the fourth day of the biggest assault on a European state since World War II.
The ramp-up in tensions heightened fears that oil supplies from the world's second-largest producer could be disrupted, sending Brent crude futures up US$4.21 or 4.3 per cent to US$102.14. US West Texas Intermediate (WTI) crude futures were up US$4.58 or 5.0 per cent at US$96.17 a barrel.
"I am telling clients all we know for certain is that energy prices are going to be higher, and there are going to be some beneficiaries," said John Milroy, Ord Minnett financial adviser in Sydney.
"It's an old cliché, but it's true that uncertainty drives moves in both directions."
Other commodities rallied, with wheat up 8 per cent, while aluminium and nickel were also sharply higher.
Traders will be closely watching a meeting this week of OPEC and other major producers led by Russia, where they will discuss plans for further output.
The group had agreed previously to increase production gradually each month, but the Ukraine crisis could throw those plans into disarray.
Gold and the yen, go-to assets in times of uncertainty, rose, while the dollar was up against all other currencies.
The euro was under pressure owing to Europe's reliance on Russian energy.
The surge in prices is adding to worries about inflation, which is running at a 40-year high in the United States, with central banks already fighting an uphill battle to get it under control.
The conflict is "likely to boost energy prices significantly, resulting in immediate inflationary effects and a large drag on global growth", Silvia Dall'Angelo, senior economist at Federated Hermes, wrote in a note.
"It's fair to say that the crisis increases the room for central banks' policy mistakes."
On equity markets Tokyo, Hong Kong, Shanghai, Seoul, Singapore and Bangkok were in negative territory, though there were some gains in Sydney, Manila and Wellington.
Asia-Pacific shares turned lower after spending the morning session mostly in the green, putting them in line with declines for US and European stock futures.
Japan's Nikkei 225 fell 0.25 per cent, while Chinese blue chips slipped 0.36 per cent. Australia's benchmark, though, added 0.64 per cent, boosted by energy shares.
MSCI's index of regional stocks lost 0.58 per cent.
US emini stock futures were pointing to a 2.35 per cent drop at the restart, while pan-European EURO STOXX 50 futures slid 3.90 per cent. FTSE futures declined 1.21 per cent.
"We had a deluge of very negative information over the weekend," said Kyle Rodda, a market analyst at IG Australia. "We're talking about financial stability risks, and sprinkle over that the threat of nuclear war."
"Volatility is heightened," he said. "Price action is incredibly choppy."
The 10-year US Treasury yield fell about 9 basis points to 1.89 per cent, and equivalent Australian yields retreated about 6 basis points to 2.177 per cent.
The euro slid 1.1 per cent to US$1.11465 and 1.1 per cent to ¥128.785, while the risk-sensitive Australian and New Zealand dollars sank 0.78 per cent and 0.88 per cent, respectively.
The rouble dived as much as 29.67 per cent to a record-low 119.5 per dollar.
Gold rose more than 1 per cent to around US$1,909 on demand for the safest assets.
"This volatility will go on for a while yet, until the dust settles," said Shane Oliver, chief economist at AMP Capital.
In the meantime, "markets are going to be swinging from headline to headline", he said.